Small Business and the Affordable Care Act in 2014

Stacey Freed / REMODELING / January 28, 2013

Ten takeaways from a REMODELING’S webinar on the Patient Protection and Affordable Care Act

If your company has fewer than 50 employees you will likely not have to change your current procedures regarding health insurance for your employees in 2014; you are not required to offer health care.

But there are a few things that will affect everyone, since every individual will be required to have health insurance next year — or pay a tax.

At a recent health care webinar sponsored by REMODELING, Doug Delp, owner of The Delp Group, in Green Lane, Pa., a full-service human resources and benefits company, and Larry Harrison, owner of Harrison Insurance, in Las Vegas, told listeners about what to expect from the Affordable Care Act and answered their questions. Here are 10 takeaways from that conversation.

If you have fewer than 25 employees, you may be eligible for a tax credit if your average annual wages for those employees is less than $50,000. This does not include the owners’ salaries.

Each state must have an exchange — a sort of health insurance mall — where individuals and companies can purchase health care coverage. It might be cheaper for individuals to pay the tax instead of getting insurance; however, Delp and Harrison believe that over time the tax will increase and will not be such an appealing option. The exchanges will offer at least three levels of coverage: bronze, silver, and platinum.

Individuals can get government subsidies for health care if their combined household income is less than 400% of the federal poverty level (about $90,000 for a family of four). The subsidy goes to the insurance company in the individual’s name.

The Internal Revenue Service (IRS) has not yet indicated whether health care will be considered income.

Individual and small-group insurers must pay 80 cents for every dollar of premium on medical expenses (and not on marketing, for example). If not, they are required to send rebate checks to their clients. Employers need to know what to do with the checks: If the employer pays 100% of coverage, then the employer retains the whole rebate; if the employee pays 100%, he or she gets the rebate; and if it’s a shared burden, then the money must be apportioned accordingly.

Insurance carriers cannot discriminate against people who have preexisting conditions and can only vary premium rates by family size, tobacco use, geography, and age.

If your company has more than 50 employees, their health care contribution cannot exceed 9.5% of their salary.

If you have more than 50 employees and offer health care, you will have to provide “minimum essential coverage,” which has not yet been clearly defined. However, the plan must match the “bronze” (lowest) level of coverage offered by your state exchange.

In 2014, depending on the type of business you own, the IRS will ask you to report at least 13 different types of taxes having to do with the Affordable Care Act.

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